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Bagnall: The damage done by RendezVous LeBreton's failure

Author of the article:

James Bagnall

Publishing date:

March 1, 2019 • 4 minute read

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When a partnership as consequential as RendezVous LeBreton blows up, as it did Wednesday, the knock-on effects are many. No matter how the National Capital Commission proceeds from here, key players in the city will be paying for this failure for years to come.

Bagnall: The damage done by RendezVous LeBreton's failureBack to video

With their failure to come to terms after six weeks of mediation, Trinity Development founder John Ruddy and Ottawa Senators owner Eugene Melnyk not only dismissed a once-in-a-lifetime opportunity to be part of something special, they tarnished their own brands along the way. No matter who was primarily responsible for the rupture, they were equal partners in a venture that aimed to invest $4 billion over the next two decades in the last large remaining chunk of land near the Parliament Buildings.

Ottawa Senators owner Eugene Melnyk.TONY CALDWELL/Postmedia

From the moment the NCC picked them for this epic job, Ruddy and Melnyk had nearly three years to work out a formula for sharing hundreds of millions of dollars in potential profits. And they failed.

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The NCC and City of Ottawa also bear significant responsibility for the collapse of the Ruddy-Melnyk partnership. The NCC, because it failed to address much earlier the economic dispute between Ruddy and Melnyk. The city, because it encouraged the policy of building densely packed apartment and condominium towers along the route of the light rail transit system — scheduled to begin operation this spring.

One such proposal — a 1,240-unit development at 900 Albert St. just south of LeBreton Flats — drove a wedge between the sponsor Ruddy and Melnyk, who became convinced the sale of apartments at 900 Albert would undermine the economics of LeBreton Flats. RendezVous LeBreton had plans for building roughly 200 units annually on the Flats.

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Ruddy produced a study suggesting there’s plenty of demand in Ottawa to support both projects. Melnyk commissioned one that came to the opposite conclusion. The result late last year was $1.7 billion in claims and counterclaims.

John Ruddy.Wayne Cuddington/Postmedia

In hindsight, it seems clear these two entrepreneurs should never have been in business together. They found common cause, it seems, only because former Senators CEO Cyril Leeder was instrumental in the early going when Melnyk was preparing for and recovering from a liver transplant.

The NCC was well aware of the clash of interests. Yet, rather than address head on the fatally flawed relations between Ruddy and Melnyk a year ago, the NCC simply threatened to end the process. Melnyk finally signed the term sheet but the RendezVous LeBreton partnership limped along for another wasted year. Nothing was resolved. Dozens of RendezVous LeBreton subcontractors have been left with little real hope of recovering money they invested preparing for the contest.

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The costs of the past year of inactivity are hardly confined to potential suppliers. Consider the quite separate condo and commercial development just north of LeBreton known as Zibi. Filings by Zibi’s parent company reveal the project had sold or pre-sold 120 condos as of Feb. 25. That’s just 23 more than a year earlier. More concerning, there have been three sales or pre-sales in the five most recent months, and none so far this year.

Zibi’s longer-term goals are ambitious — it plans eventually to fill out the 34-acre site with more than 1,800 residential units and two million square feet of commercial space. Having a signature community of attractions on nearby LeBreton, notably an NHL stadium, would have helped Zibi’s sale efforts considerably.

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The same applies to a couple of other large developments — the 1,950 unit LeBreton East community proposed by the Malhotra family and, of course, 900 Albert. (Though 900 Albert has the advantage of being located at the junction of two LRT lines).

The latest renderings by TIP Albert GP show the developer’s plans to build a three-tower complex with buildings of 65, 56 and 27 storeys at 900 Albert St., near the Bayview Confederation Line and Trillium Line station. Source: TIP Albert GP/City of OttawaTIP Albert GP

And what about Ruddy? If he opts not to return to LeBreton Flats in some form, the Ottawa real-estate entrepreneur has no shortage of projects on the go — including major developments in downtown Toronto and on the outskirts of Calgary. In Ottawa, he is putting up significant retail and residential clusters at Rideau and Chapel, and Gladstone and Loretta. The latter is near the site of the Gladstone LRT station on the Trillium line.

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Yet, after the sheer scale of RendezVous LeBreton — a 53-acre project — these are comparatively minor endeavours. Ruddy’s ambitions run bigger than these.

For his part, Melnyk says he is now determined to build a “hub” somewhere in central Ottawa that will include a community of some sort clustered around a stadium. This idea flows from recent developments such as the construction of a multibillion-dollar community in Inglewood, Calif. — the new home for the L.A. Rams football club. Multiple partners combine to put in place restaurants, retail shops, hotels, residences and parks — a place where people mingle every day, not just on game nights.

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Sounds like the game plan that launched RendezVous LeBreton in the first place. Except now Melnyk is starting again from scratch in a town he does not call his own, one that offers no significant piece of downtown real estate that would serve as well as LeBreton Flats would have done.

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